Asked by Zhang HongKai on Jun 12, 2024
Verified
Forming a business with a high debt-to-equity ratio is an example of:
A) circumventing a statute.
B) thin capitalization.
C) creditor domination.
D) looting.
Thin Capitalization
A financial situation in which a company has a high level of debt compared to its equity.
Debt-to-Equity Ratio
A financial metric that shows the comparative ratio of debt to shareholders' equity utilized to fund a company's assets.
- Gain insight into the concept of piercing the corporate veil in law and the rationale behind its application.
Verified Answer
CS
Ciara SmithJun 14, 2024
Final Answer :
B
Explanation :
Forming a business with a high debt-to-equity ratio is an example of thin capitalization.
Learning Objectives
- Gain insight into the concept of piercing the corporate veil in law and the rationale behind its application.